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Is MS really a boogey man?

To me, there is the big fake bogey man of MS that will JUMP into your market if you make a successful product. I totally DISAGREE with this mentality.

Sure, if you are a furniture company that makes your business off of selling seats to the auto industry, you are very vulnerable (this kind of transition in the auto industry actually took place). Sooner, or later, the auto industry was going to start making their own seats!

So, if you are building some platform type tools, yea..you better watch out. as you are vulnerable.

However, what about the general application space, and the ability of MS to take over?

QuickBooks is now a billion + dollar a company. (they have a major office in my City). This is despite MS bundling and nearly giving away Microsoft Money for what..8 or more years now? Did MS by going into the account market kill quickbooks? Not even close.

Further, MS then went ahead and purchased Great Plains Accounting software. So, did the next day the accounting market for computers collapse? Not a chance. Did MS purchase of Great Plains hurt Business Visions, or the other vendors of accounting software? No, it did not. They can buy into an application space, but they have to do the same work as everyone else in that space. I see NO increased desire to use Microsoft money, or use Great Plains software. The MS name did not turn these purchases did not turn into gold.

There is seems to be this idea that MS can simple watch for a product that becomes a success, and then simply take over. This is sheer non sense. In fact, in many cases they are in a MUCH worse position to make money. I mean, do you think that by purchasing a virus software company, and packaging it with windows they can charge MORE for windows? (that is a ridiculous 100% insane concept. Cost pressures continue to mount against windows as we speak!).

Ask your self what kind of market gains the x-box has made on the Sony play station (x-box is barley keeping up with the defunct and 3rd place Nintendo).

This idea of the MS being a big boogey man is really silly. I without question accept that some application spaces are vulnerable from MS (so, yes..if ms starts shipping virus software, then your virus company is in trouble. On the other hand, does this move make MS money? NO, it is does not. Further, if things like virus software SHOULD be included with the computer. then you as a vendor can be side swiped. In 9 out of 10 times this is not because MS wants to kill your market, it is because they are compelled to include that functionally in the os).

The moral of this one is don’t try to compete on the platform with such a strong competor. However, you can grab a nitch..and MS can’t take it away, or they have to buy YOU!

The BEST markting article I have ever read expalins what market space you need to move into. It can be found here:

http://software.ericsink.com/Choose_Your_Competition.html


Albert D. Kallal
Edmonton, Alberta Canada
kallal@msn.com
http://www.attcanada.net/~kallal.msn

Albert D. Kallal
Thursday, June 17, 2004


If it were any other company besides MS, this wouldn't even be an issue.  But since it's MS, anything that they do will be questioned and scrutinized to death.

Is it widely considered good practice to run an anti-virus package on Windows? Absolutely. Does it make sense for the OS vendor to include this functionality? Yup.

So anyone selling products that are widely viewed as "must have accessories" to Windows should fully expect that someday MS might compete with them.

Mark Hoffman
Thursday, June 17, 2004

Hmm.... didn't MS attempt to purchase Quicken back in the mid '90's?  The FTC blocked it, if I remember correctly.  I don't know if your Quickbooks quite invalidates that "boogeyman" argument.

Russ
Thursday, June 17, 2004


" I don't know if your Quickbooks quite invalidates that "boogeyman" argument. "

How does MS attempting to purchase Quickbooks change what Albert says? His point with Quickbooks is that MS competed against Quicken with MS Money.

The merger was rejected and Quickbooks and MS kept competing. And Quickbooks has emerged as the market leader in spite of competition from MS.

JT
Thursday, June 17, 2004

MS is the boogey woogey boogle booy of coompany B.

B stands for Baad.

Baad Booy
Thursday, June 17, 2004

"Sure, if you are a furniture company that makes your business off of selling seats to the auto industry, you are very vulnerable (this kind of transition in the auto industry actually took place). Sooner, or later, the auto industry was going to start making their own seats!"

Really bad analogy. The auto makers used to make all of their own parts, but found that highly focused outside vendors could do a better job making, using your example, parts. The auto industry DEcentralized. A part of the reason for this is that it's a hugely competitive industry, with cutthroat margins, and you need to do what you're best at.

Compare this to Microsoft - Windows pulls in something like a 85% profit margin, and because of the monopoly position (I'm not saying it's bad) consumers don't really have much say over that. Microsoft uses these monopoly funds to launch all sorts of horribly uneconomically successful ventures (against other, real participants that try to have a real business model). See MSN, the XBox, WebTV, among many, many other examples.

Dennis Forbes
Thursday, June 17, 2004

<>To me, there is the big fake bogey man of MS that will JUMP into your market if you make a successful product. I totally DISAGREE with this mentality.<>

Tell me one highly successful product that MS didn't also do them selfs (after letting the ISV's do marketing) or tried to enter?

MS, today exists due to buying an OS from an ISV (MS-DOS) and licensing technology (Apple GUI).  So its nothing new in MS history its just that they are now big and everything they do is noticed.

I think that what MS must try to understand is that maybe now its not allowed to buy another company, it could still could buy a significant part of minorty shares of an ISV or some tech company and still profit. 

MS should start a MS investment group or something. This will make sure that MS will still make money for its stockholders if Linux or even Apple take over. As stockholders of MS don't really care if MS innovates but more about its profits. The profits could come from anywhere even tropical wood farms.

somemorone
Thursday, June 17, 2004

>>Really bad analogy. The auto makers used to make all of their own parts, but found that highly focused outside vendors could do a better job making, using your example, parts. The auto industry Decentralized.

No, they did not. Companies like Dodge (the dodge brothers) were in fact a bicycle company that helped design and build parts for companies like Oldsmobile. (and, to be fair..they looked at the industry. and got into the business them self’s too!).

Virtually all of these smaller companies relied IMMENSELY on other companies to help them build parts to create an auto.

It was MUCH later when assembly line manufacturing was introduced by the likes of Henry Ford. The Ford assembly line concept was also merged with his personal belief that EVERYTING  from the trucks, the ore plants, the ore boats!, the glass, the raw glass materials and even owning rubber plants in 3rd world places should be owned and run by ONE company.

However, this Ford model is NOT a reasonable picture of what the early auto years looked like.

Most (if not all) early car builders did NOT make the steel, nor did they even make their own glass, and as I mentioned, their well hand crafted seats. This stuff was farmed out to many small manufactures. As the auto industry matured, they pulled more and more manufacturing under one roof. Today, with modern manufacturing, communication and good number of other reasons, it is standard fair in the auto industry farm out parts of manufacturing.

However, you do not want to confuse the issue of outsourcing with the plain fact that auto manufactures include MORE AND MORE content in their vehicles. (the outsourcing issue is moot). Fact is, you don’t have to rip out the stereos of a new car like EVERYONE did 20 years ago (that was the first thing anyone who wanted a decent stereo in their car did!).

So, sure..MS purchased disk utilities from Symantec, Sure, they purchased Citrix to get the remote desktop protocol. (they purchase tons of software. just like the auto industry NOW also purchases tons of outsourced products).

The REAL issue here is what is going to be included in the final product. In both the auto industry (stereos a good example), and in the OS industry (Virus software), what will be included as part of the final product is the issue here.

If you are stereo shop,  you been hit real hard, since you can now get real decent stereos in your car (so, you now specialize in making super boom boom stereos for rice eating hot rods).


Albert D. Kallal
Edmonton, Alberta Canada
kallal@msn.com
http://www.attcanada.net/~kallal.msn




).  bearning maker that supposed parts to Oldsmislbe, and hten dec

Albert D. Kallal
Thursday, June 17, 2004

Would you want to compete with Microsoft on their turf, i.e. the desktop?  I wouldn't.  Not because they are "evil" but because they have done too good of a job on the competion.

Bill Rushmore
Thursday, June 17, 2004

"No, they did not."

I'm sorry. Maybe I was confused, but I thought Microsoft existed in the modern economy, and modern era. Maybe you're talking about the Microsoft of 19-oh-7.

The simple fact remains - Microsoft enjoys unbelievable profits on one or two products. With these profits Microsoft tries to take over every other industry (because the shareholders demand the sort of growth they've seen in the past). Imagine if GM made 85% profit on every car, most roads were "GM-car-only", and GM then used these funds to try to undermine every other business out there. Rightly the government would be seriously concerned because it threatens innovation (four years ago I was one of the biggest and most vocal defenders of Microsoft. Now I think they have absolutely devastated innovation in the computing sector).

Dennis Forbes
Thursday, June 17, 2004

One random thought on MS attempting to enter many markets:  In order to justify a higher than average P/E multiple on MS stock, Microsoft must do things that make it seem like a "growth" company.  This means undertaking highly publicized new ventures.  Failure to do this means that they will be valued on Windows/Office sales only, which would decrease the perception of their worth and position as an innovator.

I think this principle is true for Intel to an even greater extent.  They're a commodity company right now, but always seem to generate buzz about something, even if it inevitably peters out.

This isn't a conspiracy theory, but a possible explanation why so much MS money has gone into unprofitable ventures.

Albert makes many excellent points in his post.  Running an ISV requires extensive industry knowledge and hand-picked people with a direct profit motive.  My company makes specialized accounting software and we went through the "oh crap, MS just acquired Great Plains" mode.  It only lasted about a week until we realized all the things that we brought to the table that MS could never bring.

It's interesting, because every accounting software ISV releasing a new product goes through this epithany where they say "wow, everyone needs Accounts Receivable, we've got that.  Payroll?  Check.  Billing?  Check.  Payables?  Check.  With a little adaptation, we'll be able to sell this to at least 10% of the small businesses in the country".  Then they sober up and realize that the only way they'll make it is to sell to customers they really understand.  Microsoft goes through this punch drunk phase as well, with similar results.

Bill Carlson
Thursday, June 17, 2004

"super boom boom stereos for rice eating hot rods"

wtf?

Clutch Cargo
Friday, June 18, 2004

Say what you want about Microsoft's success at it, the fact remains that in the late nineties basically all VCs stopped funding desktop software development and the reasons they stated, at least as reported by popular news sites, was that any desktop application had a lid on it.  If it got really big Microsoft would decide that it was part of its business, freeze the market by announcing a product, bundle the product with its monopoly OS if necessary and drive you out of business.

Were they correct in this perception?  Who knows?  There certainly was alot of precedent.  Either way it killed the horizontal desktop software development space.

name withheld out of cowardice
Friday, June 18, 2004

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